GAO Report Finds Increasing Hospital-Physician Consolidation Highlights Need for Payment Reform - McDermott+Consulting

GAO Report Finds Increasing Hospital-Physician Consolidation Highlights Need for Payment Reform

On December 18, 2015 the U.S. Government Accountability Office (GAO) released a report on increasing hospital-physician consolidation. According to the GAO, the number of vertically consolidated hospitals and physicians increased from about 1,400 to 1,700 between 2007 through 2013, while the number of vertically consolidated physicians nearly doubled from about 96,000 to 182,000 during that same period. Because Medicare often pays providers at a higher rate when the same service is performed in a hospital outpatient department rather than in a physician office, these changes can increase spending. Congress recently partially addressed this dynamic by mandating site neutral payments for non-grandfathered off-campus hospital services beginning in 2017, but this report could prompt further legislative or regulatory change.

The GAO recommends that Congress should consider directing the Secretary of the Department of Health and Human Services (HHS) to equalize payment rates between settings for certain physician office visits—and other services that the Secretary deems appropriate—and to return the associated savings to the Medicare program.